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30 Mar 2009 08:49
Growth in demand for credit by South Africa’s private sector slowed to 11,05% year-on-year in February, above forecasts, from 11,85% in January, central bank data showed on Monday.
During the same period, growth in the broadly defined M3 measure of money supply braked to 13,17%, compared to a revised 13,92% previously.
A Reuters poll forecast that private sector credit growth would come in at 10,72% in February, while the annual growth in M3—which often points to inflationary pressures in the economy—was seen at 12,25%.
Fanie Joubert, a senior economist at the Efficient Group, said the main point was that on a trend basis, credit extension was decelerating.
“Money supply was slightly higher than expected, but on other side credit is lower than expected, which is positive as the decelerating trend remains on track.”
Jean Mercier, the chief economist for Citigroup in South Africa, said the figure was a major surprise “as clearly we are in an environment where credit growth is weaker than a few months ago”.
“It is in single digits on a quarter on quarter seasonally adjusted basis and will go further, although it is not collapsing or contracting on a seasonally adjusted basis.
I think it is a low demand for credit story rather than a credit crunch, even though banks are tightening their lending.
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